Medicare gets the headlines but future of Social Security will affect seniors’ health

About Judith Graham

Judith Graham (@judith_graham), is a freelance journalist based in Denver and former topic leader on aging for AHCJ. She haswritten for the New York Times, Kaiser Health News, the Washington Post, the Journal of the American Medical Association, STAT News, the Chicago Tribune, and other publications.

The future of Social Security isn’t commanding center stage in this election season. But it’s an important topic sure to receive considerable attention in the years ahead as baby boomers age and begin to rely on this government entitlement program.

The essentials

Social Security is a primary source of income for most older Americans. “About one-quarter of married couples and just under half of single retirees rely on Social Security for 90 percent or more of their income,” reports the AP’s Stephen Ohlemacher, who was responsible for this multi-part effort.

Without this income, large numbers of seniors would be impoverished, without money to pay for medications, their share of the cost of doctors’ appointments or items not covered by Medicare such as eyeglasses or hearing aids. Even with income from Social Security, a significant subset of older people find it difficult to secure adequate food and housing – both of which are essential to their health.

Nearly 56 million people get Social Security benefits. That number will swell to 91 million in 2035.

Social Security pays benefits to the elderly (36 million, average monthly benefit of $1,235), people who are disabled and unable to work (8.7 million, average benefit $1,111), spouses, children and widowers.

Financing

Social Security is financed through a 12.4 percent payroll tax. People who are self employed pay the full amount. Those who are employed pay half, and their employers pay the other half.

The financial health of Social Security depends on how many workers are paying into the system and how many people are taking money out (because they receive benefits). For much of the program’s history, many more people paid into Social Security than were eligible for benefits and large surpluses accumulated.

As Ohlemacher notes, “In 1960, there were 4.9 workers paying Social Security taxes for each person getting benefits. Today there are about 2.8 workers for each beneficiary, a ratio that will drop to 1.9 workers by 2035, according to projects by the Congressional Budget Office.”

This year, Social Security is expected to collect $623 billion in payroll taxes and pay $789 billion in benefits. Its surplus covers the difference between expenditures and receipts.

The disappearing surplus

Social Security accumulated large surpluses over the past 30 years; currently, the size of the surplus is $2.7 trillion.

As baby boomers become eligible for Social Security (the current age of eligibility for full benefits is 66) and fewer workers pay into the system, those surpluses are set to disappear by 2033. As Ohlemacher observes, “at that point, payroll taxes would provide enough revenue each year to pay about 75 percent of benefits.”

Again, there’s an important connection with seniors’ health: To the extent that income is reduced, older people likely will find it more difficult to afford necessary expenses, including their share of the cost of medical services.

Once the surplus evaporates, Social Security will start accumulating deficits – if it continues to pay the full amount of promised benefits. Those cumulative deficits will total $134 trillion by 2086.

Though the financial future of Medicare is a more pressing problem at the moment, the long-term future of Social Security speaks to a similar question at stake: What is our nation’s commitment to ensuring the long-term health and well being of seniors?

New and noteworthy trend

Ohlemacher leads the series with this important trend: “People retiring today are part of the first generation of workers who have paid more in Social Security taxes during their careers than they will receive in benefits after they retire.”

What lies ahead

Although everyone realizes a crisis lies ahead, a sense of urgency hasn’t yet materialized. Why? Ohlemacher quotes Vermont Sen. Bernie Sanders as saying: “I would like to see Congress move on this tomorrow but we do have 22 years before there is any cut in Social Security benefits. (The actual figure is now 21 years.) Compared to other crises – the collapse of the middle class, real wages falling for American workers, 50 million people have no health insurance – how would I rate the Society Security situation? Nowhere near as serious as these and many other problems.”

There are two basic options for reforming Social Security: raise taxes or reduce benefits (high-income workers tend to be the target of these proposals). Asked in a new AP poll what they would prefer, Americans say their No. 1 priority is preserving Social Security benefits, even if that means undergoing tax increases and seeing the retirement age lifted.

For a snapshot on where the presidential candidates stand on Social Security (remember, this is a moving target during this election season), Ohlemacher provides a valuable summary in this story. Use it for guidance, but make sure you consult recent news reports and campaign communications staff for updates if you decide to publish anything on this before the election.

We’ll provide more information, resources and story ideas about Social Security here in another month or so, courtesy of a tip sheet written by one of the nation’s foremost journalists covering this topic.